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Erik Oberholtzer, Matt Lyman and David Dressler met while working
in the kitchen at a luxury beach resort in Southern California.
Together, they envisioned a restaurant where they could follow
their cooking passions and serve organic, farm-fresh, "slow food"
dishes at affordable prices. But the food wasn't the only thing
that was slow. Once the trio decided to join forces and launch an eatery, they took their time to
carefully plan every aspect of the business before taking
the plunge.

"It took probably two years from idea to opening," says
Oberholtzer, chef and co-owner of Tender Greens, which opened in
2006 and now operates seven locations across California. Much of
those two years involved fundraising and constantly revising the
business plan.

"We would make revisions to our plan after every meeting with a
potential investor, because sophisticated investors would ask
questions we hadn't thought of, causing us to go back and refine
the numbers," Oberholtzer says. "That process was really
beneficial, because we went into the opening with a lot of focus.
We went into it knowing the culture we wanted to create, the
brand we wanted to build and the type of employers we wanted to
be."

All that planning paid off: First-year profits were projected at
$850,000, but the company ended up with $3 million. Last
year,Tender Greens reported a 53 percent year-over-year sales
increase from $10.9 million in 2010 to $16.7 million in 2011. The
owners have plans to open three more locations in 2012, and
starting in 2013, the plan is to open four to five new stores per
year.

Tender Greens offers a casual, walk-up
dining environment, where guests can watch meats grilling and
meals being prepared behind a glass partition as they walk
through the line. The core menu consists of "big salads," "hot
stuff" (a hot plate or sandwich) and soups. A few crowd
favorites include the Southern fried chicken salad, the
octopus salad, the Happy Vegan salad and the mashed potatoes.

Executive chefs at each restaurant also create their own specials
that vary by location, change twice daily and are made from
scratch, like Cajun chicken and sausage gumbo; aged-cheddar bread
pudding; English pea risotto; steamed clams with chorizo
brown-butter spaghetti; shredded duck and kale salad; and
house-made porchetta (pork roast).

What really sets Tender Greens apart from other fast-casual
eateries is the care taken in preparing the cuisine. The chefs
cure the bacon in-house, make their own salami, craft handmade
pastas, cure their own caviar, mix their own natural sodas and
work to support small farmers.

While not every new business will require two years of upfront
planning like Tender Greens, every aspiring entrepreneur should
pay significant attention to laying the proper groundwork before
launch. In studying businesses that have succeeded and those that
have failed, the difference is planning, says George F. Brown
Jr., CEO and co-founder of Blue Canyon Partners, a management
consulting firm in Evanston, Ill. "The successful business
leaders don't go to work every day expecting a new
adventure. They have a plan and know what to do. Over
and over, in small businesses and large ones, I've seen the
benefits of careful planning and the disasters that can result
from a failure to plan," he says.

Before launching your business, here are six steps to ensure a
successful start.

1. Go beyond the business plan.
Planning carefully before launching a new business is not limited
to preparing a business plan, says Bruce Bachenheimer, clinical
professor of management and director of the Entrepreneurship Lab
at Pace University in New York City. "While preparing a business
plan is generally a valuable exercise, there are other ways to
plan carefully," he says. Bachenheimer recommends three planning
methods.

The Hired-Gun Approach: Partnering with
experts who have in-depth knowledge and experience.

The Ultra-Lean School of Hard Knocks Tactic:
Figuring out a way to rapidly test and refine your model at a
very reasonable cost.

While writing a business plan is certainly helpful, the real
value is not in having the finished product in hand, but rather
in the process of researching and thinking about your business in
a systematic way, according to Victor Kwegyir, founder and CEO of
Vike Invest, a U.K.-based business consultancy. "The act of
planning helps you to think things through thoroughly, study and
research if you are not sure of the facts and look at your ideas
critically," he says.

If you don't commit to in-depth preparation, launching a new
business can be a very expensive lesson in the value of planning.
Bachenheimer asks: "Would you enter a high-stakes poker
tournament without knowing the game, assuming that you'll figure
it out as you go?"

2. Test your idea.
Sixty percent of new businesses fail within the first three
years, according to Victor Green, a serial entrepreneur and
author of How to Succeed in Business by Really Trying.
"Too often people rush into business without carefully checking
out their idea to see if it will work," he says. "Research is
essential."

While the internet makes it possible to conduct research without
leaving your desk, Green says Googling isn't enough. "Talk to
real people who are in the business you want to go into. Talk to
people who might be your customers and get their views and
opinions," he says. "Test your ideas if possible."

For the founders of Tender Greens, spending two years in the
planning process allowed for a unique opportunity to try their
ideas out on the public that would eventually become their
clientele. "During that time we were testing recipes and refining
our business,"

Oberholtzer says. "Because we were already working in the
restaurant industry, we were able to actually test some of our
recipes on customers at the resort, for two or three times the
price we planned to charge at our own restaurant."

3. Know the market.
Ask questions, conduct research or gain experience to help you
learn your market inside and out, including the key suppliers,
distributors, competitors and customers, Bachenheimer says. "You
also have to really understand the critical metrics of your
market, whether it's as simple as sales per square foot and
inventory turnover, or an esoteric measure in a highly
specialized niche market," he says.

Tender Greens' Oberholtzer and his partners spent many years
working in the California restaurant industry before launching
their business. That experience allowed them to not only perfect
their craft, but also to develop longtime relationships with food
purveyors, farmers and other suppliers that they relied on to
help Tender Greens succeed. In fact, Scarborough Farms, the
restaurant's lettuces and greens supplier, is a partner and
investor in the company, thanks to its long relationship with the
founders.

4. Understand your future customer.
In most business plans, a description of potential customers and
how they make purchasing decisions receives much less attention
than operational details such as financing, sourcing and
technology. But in the end, it will be the customers who
determine your success or failure, Blue Canyon Partners' Brown
says.

"You need to know who they are going to be, what drives their
purchase decisions, what you can do that will differentiate your
offering from that of competitors and how you can convince them
of the value of your offer," he says. "And the answers to those
questions shouldn't be off-the-cuff guesses. They need to be
well-grounded in reality and market testing."

Before launching Tender Greens, Oberholtzer and his partners
spent years creating and serving the kinds of dishes they wanted
to one day serve at more affordable prices. That experience, says
Oberholtzer, is what helped them develop an understanding of the
types of farmers-market-inspired dishes that would please local
customers.

Understanding your future customers can be the difference between
changing a failed aircraft engine on the ground vs. doing so
midflight, Brown says. "The former is much simpler and much
more likely to be successful. Once you start up the business,
it's likely that you will be consumed with operating details,
often with little time to think and even less to make
adjustments. Implementing the right plan from the start is far
more likely to yield success than figuring out a plan on the
fly."

5. Establish cash resources.
"Cash is king, so you must take steps to adequately capitalize
the business and secure ready sources of capital for growth,"
says Steve Henley, senior managing director and national tax
practice leader at Cbiz MHM, an accounting and management service
provider. "A good cash-forecasting tool is critical so that you
can plan for the sources and uses of cash on a rolling basis."

While some startups rely on owners' capital, others look to
investors. Tender Greens' owners raised funds from friends,
family members and colleagues.

To determine how much cash you'll need, develop a cash-flow
statement that estimates your expenses and income. Be sure to
include appropriate expense levels by researching actual business
costs rather than estimating based on your personal experience as
a retail consumer. "For instance, you can host your personal
website with unlimited bandwidth for $9.95 a month, but operating
a commercial website may cost hundreds or thousands of dollars a
month," Pace University's Bachenheimer says.

Limit your need for cash by avoiding long-term commitments, like
long-term leases, until necessary, adds Cbiz's Henley. "There
will be a considerable amount of uncertainty during the first few
years, so be conservative in making commitments for resources
that might not be yet needed."

6. Choose the right business structure.
From the beginning, it's crucial to select the appropriate
corporate structure for your business, which will have
legal and tax
implications. The structure you choose can also ensure the
success of future decisions, such as raising capital or exiting
the business.

Most startups should probably operate as either an LLC or an S
Corporation, Henley says, because starting with one of those
structures and converting to a C Corporation later is much easier
than starting as a C Corp and trying to convert to an LLC or S
Corp. To determine which structure is best for your business,
Henley outlines four considerations.

Liability limitations: For C Corps, S Corps
and LLCs, the owners' personal liability is generally limited
to the amounts invested and loaned. There is unlimited
liability for general partners.

Startup losses: If your company is an S Corp
or an LLC, also known as "pass-through" structures (because tax
liabilities and benefits "pass through" to the owners' personal
tax return), you can usually write off startup costs as losses
on your personal tax return. In a C Corp, startup costs
producing tax losses can only be utilized at the business level
and offer no future benefit if the new company has future tax
profits.

Double taxation: "Generally, double taxation
of earnings is avoided for pass-through entities, but not for C
Corporations," Henley says.

Capital-raising plans: If you plan to take
your business public or fundraise through private equity, these
plans may require that the company not be a pass-through
structure.